Ann: Trading Update, page-4

G'day mate, thanks for your comments, they're greatly appreciated.

Rasaj: yes, it is good for a publicly listed company to communicate with the market. I will be a little cynical here and say that this is calculated announcement to lessen possibly not very positive AR impact. Yes, COVID and Ukraine war has definitively impact on business world wide.Management is explicit that there will be a reduction in royalty revenue, so I agree with you, and I think this is simply good management practise.

The revenue from DDT auto sales are declining over the 3 or so years the ownership. These are actually not sales, but royalties. So DDT Australia is more or less fully dependent on DDT South Africa fortunes and abilities.Is this wise? Only future will tell.

Yes, revenue derived from sale of goods has diminished, whilst revenue derived from service and licence fees, and royalties have increased significantly (so much that total revenues under new management increased by 15% for the 12 months to June 2020, and by 3% for the 12 months to June 2021). As far as I'm aware, this model isn't materially dissimilar from how Coca-Cola works, allowing them to maintain an asset lite operation, without needing to have massive expenditures in down times. The margins achieved from this approach are far superior to producing goods themselves.

IMHO DDT AUS will not really move forward depending on royalties. South African company will NOT make any significant inroads in the world microdot market. Holomatrix, IDDOT, Recoveri and others are trying very hard to achieve that, but results are virtually 0. That is a hard fact. All of the DDT previous snippets in their AR's about Toyota OEM and other sales in Europe are just very, very low. Just that you know - TOYOTA is not a big seller in Europe, having only 6% of the market share.
The South African company controls approximately 80% of the South African market share for new vehicles being microdotted. Low sales also translates to room for growth, so I don't particularly see that as a negative.

So where is DDT Australia going? 3 years after the takeover the stock price is the same as then, revenue is down, no new markets or products and no announced of a clear path for the future.

As per my earlier comments, revenue is not down. That's false. 2 years under new management have seen 2 years of revenue growth. Who knows what the current year will show. I'm pessimistic about this year's results, but that doesn't alter the facts.

Yes, they have PROPERTY VAULT, arrangement. Not a DDT product, this was brought in by the DDT majority shareholder. So I presume that DDT is really now making a limited volumes of plastic microdots (note that they NEVER made metal dots) and TRACE material.

Another revenue sharing arrangement, which has limited cost to the business, but it shares in the upside on revenue derived by PropertyVault. Again, not sure that's a bad thing from a shareholder's perspective.

Yes, the company has a very nice war chest of $$$, thanks to slashing of admin and other costs (in comparison to 2018). Good job there. But as business is concerned... not to sure where this is going. I will keep holding in a silly hope that they will do something about the share price. No sense is selling at this stage when the stock was $0.14 then....

Nelson Peltz is quoted as saying the best advice he ever got in his career was "Get sales up, and keep expenses down". Management has shown to be doing this, whilst not taking the piss like previous management.